Six firms settle over gas index reporting

Latest penalties set at $50 million

By LAURA GOLDBERG, Copyright 2004 Houston Chronicle

Published
6:30 am CST, Thursday, January 29, 2004

Six more companies, including Houston-based Entergy-Koch Trading and a Houston-based subsidiary of Calpine Corp., have reached settlements with commodities regulators related to reporting data for energy price indexes.

The $50 million worth of civil penalties detailed Wednesday bring total fines levied by the U.S. Commodity Futures Trading Commission to $180 million, after investigations into reporting for natural gas price indexes.

Natural gas indexes are produced by trade publications and organizations that survey energy traders and others, including producers, about gas deals.

Indexes, in turn, are used by some buyers and sellers of natural gas to help set prices in contracts.

The commission said Wednesday that administrative orders related to false reporting of data had been filed and simultaneously settled.

Aquila Merchant Services, a subsidiary of Missouri-based Aquila, agreed to pay $26.5 million, and e prime, a subsidiary of Minnesota-based Xcel Energy, agreed to pay $16 million. In those cases, false reporting and attempted manipulation of natural gas prices were the charges settled.

The remaining cases concerned just charges of false reporting.

Entergy-Koch Trading agreed to pay $3 million; Oklahoma-based Oneok and its subsidiary, Oneok Energy Marketing and Trading, agreed to pay a total of $3 million; and Calpine Energy Services will pay $1.5 million.

In the Entergy-Koch Trading case, the commission concluded that from at least February 2001 through October 2002 traders reported deals that didn't occur there as their trades, and reported false prices or volume information.

"This settlement allows us to move forward, and we do so with more rigorous procedures, controls and internal oversight in place," Kyle Vann, chief executive officer of Entergy-Koch, the parent of Entergy-Koch Trading, said in a prepared statement.

Entergy-Koch is a joint venture between Entergy Corp. and Koch Industries.

In the Calpine Energy Services case, the commission said that from at least September 2001 through October 2002, one trader reported certain trades at false prices or volumes and reported trades that didn't occur. The trader is no longer employed by Calpine.

The highest settlement fine levied by the commission in such cases was $28 million against a Houston-based Duke Energy Corp. joint venture.

Other Houston companies to settle with the commission related to false reporting include units of El Paso Corp., Dynegy and Reliant Resources.